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What to Expect at Davos 2018

January 22, 2018

Q1: What is Davos?

A1: “Davos,” as it is colloquially known, is the marquee annual meeting of the World Economic Forum (WEF), held each year in the mountain resort town of Davos, Switzerland, with which it has become synonymous. The four-day conference held in late January typically attracts over 2,500 participants, including prominent current and former leaders in politics, business, and civil society. Founded in 1971 by Klaus Schwab, the Forum has become a gathering point for global elites to speak on major topics and trends in the global economy, politics, and society. The Forum holds panels and speeches on a wide variety of topics featuring these high-profile guests.

This year’s meeting will be held between January 23 and 26 and has attracted extra attention with the attendance of Donald Trump, the first sitting U.S. president to attend Davos since 2000, and following on last year’s high-profile attendance by Chinese president Xi Jinping. Other prominent political leaders attending this year include Indian prime minister Narendra Modi, German chancellor Angela Merkel, French president Emmanuel Macron, Canadian prime minister Justin Trudeau, Brazilian president Michel Temer, Argentinian president Mauricio Macri, and Israeli prime minister Benjamin Netanyahu. These and other leaders are expected to give major speeches at the Forum and hold bilateral meetings on the sidelines.

Q2: What is on the agenda, and what are the main topics of conversation likely to be?

A2: The theme of this year’s annual meeting is “Creating a Shared Future in a Fractured World.” While broad, the theme captures the anxieties of the global elites in attendance at Davos this year. The wide range of topics on the formal agenda underscores these worries. Several reflect a growing anxiety in many countries over the role of technology, and technology companies, in the economy and citizens’ lives. Others reveal a deeper alarm over globalization and the failings of the global economy to deliver inclusive growth. Still others, perhaps in response to President Xi’s attendance last year, will reflect on China’s increasingly prominent role in the global economy, including its Belt and Road Initiative, and feature leading Chinese policymakers like Politburo member Liu He and the president of the Asian Infrastructure Investment Bank (AIIB), Jin Liqun. It may be more than a coincidence that this year’s headline theme at Davos echoes the line touted by President Xi since the 19th Party Congress last fall: “building a community with a shared future for mankind.”

More important than the formal agenda and panels are the after-hours parties and conversations on the sidelines and ski slopes, where leaders and elites engage in more candid conversation. This year, those conversations will likely reflect the formal agenda’s anxiety with the direction of global geopolitics. Ongoing tensions, most importantly over North Korea and in Syria, will continue to dominate many discussions. On the economy, much attention will be given to how central banks around the world will respond to the Federal Reserve, and potentially others like the European Central Bank, raising interest rates. Of more immediate concern will be the potential for instability in the global trading system and fears of a trade war breaking out between the United States and China. Traveling with President Trump will be U.S. trade representative Robert Lighthizer and U.S. commerce secretary Wilbur Ross, either of whom may stir controversy with their more protectionist positions.

But the biggest topic of discussion will undoubtedly be President Donald Trump’s presence. After a tumultuous first year in office and a campaign heavy on nationalist rhetoric, Trump’s interactions with other leaders at the elite gathering will be highly scrutinized. Trump has reportedly declined an invitation for a private meeting with British prime minister Theresa May, even as he will likely meet with French president Macron, with whom he enjoys a closer personal relationship. Who else President Trump chooses to meet with, including business leaders, as well as his expected speech on the final day of the event, may give some hints as to the direction of future policy.

Q3: What are the expectations for Trump’s speech?

A3: President Trump will likely use his presence at Davos and his speech to lay out his vision of an America First trade policy and to further ratchet up the pressure on North Korea. He will not face a sympathetic audience; while curiosity about Trump runs high, expectations do not. Despite that, the speech presents another opportunity for him to deliver a coherent, cogent explanation of his trade and foreign policy philosophies and how he intends to implement them and, by doing so, to move beyond “policy by tweet” and demonstrate his comfort with the issues and his underlying worldview.

On trade, the timing is particularly apt because we appear to be approaching an inflection point where the rhetoric of 2017 will give way to action in 2018. Much of that will focus on China and the global overcapacity issues for which China is responsible. Administration action against China’s trade practices is imminent, with a widespread expectation in Washington that a barrage of trade remedies will begin to be rolled out shortly after the State of the Union speech on January 30. The president will likely use his Davos speech as an opportunity to explain what he is trying to accomplish and also to enlist other nations in the effort. China has been a disruptive force for many economies in addition to the United States, and experience suggests that the best way to deal with them is through multilateral rather than unilateral pressure. While the president has shown he is not a fan of multilateralism, his advisers (and speechwriters) understand its value in dealing with China. The mystery, as always with Donald Trump, is whether he will hew to a constructive message designed both to broaden understanding of his worldview and enlist allies, or whether he will take a more confrontational approach that will alienate his audience.

On North Korea, Mr. Trump will seek to further bolster the administration’s “maximum pressure” policy in light of the North’s decision to send a delegation to the Olympics. The Trump administration sees Kim Jong-un’s Olympic outreach to Seoul as a trap the North is setting for the Moon Jae-in administration. The White House believes that North Korea is finally feeling the sting of sanctions and that the North’s overture to the South is, in large part, an attempt to win relaxation of sanctions down the road.

Matthew P. Goodman is a senior adviser for Asia and holds the Simon Chair in Political Economy at the Center for Strategic and International Studies (CSIS) in Washington, D.C. William A. Reinsch is a senior adviser and holds the Scholl Chair in International Business at CSIS. Sue Mi Terry is a senior fellow with the Korea Chair at CSIS.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).